Brazil could face transport fuel shortage by 2017

Brazil needs to pump substantial cash into refining gasoline or it could fail to meet its fuel demand for domestic vehicles “as soon as 2017”.

That’s the conclusion from a new report by Bloomberg New Energy Finance (BNEF), which suggests demand in the nation could outstrip supply by 2021 by as much as nine to 12 billion litres per year – equivalent to 20% of Brazil’s demand. It suggests the nation should also increase investment in domestic ethanol production or allow diesel light vehicles on the roads as it currently bans the sale of diesel-fuelled passenger cars.

Even though the Santos, Campos and Espirito Santo wells off the coast of Brazil are estimated to hold around 13.2 billion barrels of crude oil, BNEF claims Brazil will not have enough gas refining capacity to supply the domestic market.

Salim Morsy, BNEF Lead Analyst for biofuels in Latin America and the author of the paper said: “It was not long ago that Brazil was in a position to brag about nearing energy independence, in large part because of the strong growth of its ethanol sector. But investment has slumped since for a variety of reasons, making the country increasingly dependent on foreign gasoline refiners. It’s a costly and potentially untenable position and it puts Brazil far off track as far as its energy security goals are concerned.”

Brazil’s investment for new ethanol projects dropped to $256 million (£168m) last year from $6.4 billion (£4.2bn) in 2008 as it increased its domestic gas production.

Earlier this week, ELN reported Britain is also increasing its dependency on foreign markets for oil and road fuel needs.